Innovation Is Not A Strategy

Why Blue Sky Thinking Does Not A Blue Ocean Make
Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.
- Sun Tzu

One Of These Things Is Not Like The Other
The confused merging of strategy (specifically strategy formulation) and innovation in business circles is alarming. Both strategic thinking and thinking about innovation require a disciplined approach, especially if we desire to improve our practice in either area over time. By conflating these two associated, yet separate concepts, we are denying the clear role that each plays in the ongoing success and health of an enterprise. Unfortunately, by positing that (re)separation we are swimming against the tide.

Strategy should provide a picture of the organization as it want to look in the future. Strategy is vision directed at what the organization should be, and not how the organization will get there. We define strategy as the framework which guides those choices that determine the nature and direction of an organization.- Charles Kepner & Benjamin Tregoe

While strategy, in its purest form, is a clear demarcation of what an enterprise wants to become as defined by what it will and will not do, innovation is different in that it is focused directly on the activities to create and enact something new. Does innovation tie to strategy? Absolutely. Strategy is an essential antecedent to innovation. Without it an organization’s resources may be miss-spent or wasted in fruitless pursuits. Strategy points the way and innovation is one of the ways in which its vision is accomplished.

The Desire To Swim In A Deep Blue Sea
One of the most compelling ways in which innovation may be seen to be directly derived from strategy may be found in the work of W. Chan Kim and Renee Mauborgne the authors of, Blue Ocean Strategy. In this book they describe a pattern of behavior identified in action over 100 years and across 30 industries in which strategy is driven not from “me-too-ism” but from truly unique differentiation. The companies they describe have successfully created “blue oceans” of uncontested market space priming themselves for growth. Such strategic practices, which the authors termed “value innovation,” have helped these companies build tremendous leaps in value for both themselves and their buyers; their actions render rivals obsolete and unleash hidden demand.

The kind of innovation that Kim and Mauborgne describe demands a fundamental understanding of the business that you are in to be able to develop a clear strategy to achieve your “blue ocean.” They propose a lens for assessing your business that is tied to a specific sequence of questions relating to: buyer utility (the reason why a mass of people might buy a product or service), price (its accessibility to buyers), cost (linking cost to produce to the profitability of your strategic price), and adoption (the hurdles to the business idea represented by the blue ocean.) Armed with answers to the questions they propose you can then determine where and how best to innovate.

We’re Going Down, Way Down
One of the primary tools for determining the level of investment as a result of the strategy formulation is a relatively simple nine box matrix called the Product / Market Matrix. This tool was originally developed by Igor Ansoff in 1957 in his article in the Harvard Business review titled, “Strategies for Diversification”. The matrix identifies a range of options for investment based on the core competencies of the organization. It facilitates deep introspection so that a commonly held vision of the organization’s key capabilities, critical concerns, and commitment to act can be understood. This tool allows an organization’s strategic stakeholders to essentially put the organization “on the couch” to conduct the business equivalent of a psychoanalysis and arrive at the truth of what is and is not feasible.

Within the Product/Market Matrix you can also clearly see where “blue oceans” might be found or created. Look to the bottom right of the matrix. You can also see how great the level of effort it may be to create a “blue ocean” from scratch in this context. It will require a significant commitment of the organization’s resources in order to make the desired market a viable reality. And that requires being able to answer the hardest question in strategy formulation…

What Won’t You Do?
The most important question that can be asked to test the limits and value of a strategy is,
“What won’t we do as we implement this strategy?” In the answer to that question lies the extent and value of the focus that strategy formulation represents. If the answer is, “Nothing. We will do anything,” then the strategy may be deemed to be worthless. All strategy formulation should enable the strategic stakeholders to clearly define what success looks like and what will be done to accomplish that goal.

The mark of a valuable strategy, one that will help you define the focus of your organization’s resources, time and energy, is one that more clearly tells you and your organization what you will not pursue. It tells you in which products and services to invest. This assessment of emphasis will also determine how much effort, resources, and commitment the organization will put behind specific parts of the business in order to achieve the strategy. It will set priority for your implementation efforts, including the innovation focus.

How Will You Get There From Here
Too many organizations confuse strategy and innovation. They conflate them unwittingly, or worse yet, don’t know the difference and treat them as interchangeable synonyms. That is simply not the case. One must follow the other. And they each require the other to be in place for them to be effective. Without a clear strategic framework to guide decision making and resource allocation most attempts to innovate will result in failure. And without the clear application of innovation thinking and execution, the likelihood of an organization’s strategic goals being attained is minimal at best.